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SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549




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Form 10-Q



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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003



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Commission File Number 1-10981

SBS Technologies, Inc.

Incorporated in New Mexico



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IRS Employer Identification No. 85-0359415

2400 Louisiana Blvd. NE AFC Building 5, Suite 600,
Albuquerque, New Mexico 87110
(505) 875-0600



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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [ü]  NO [  ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).YES
[ü]  NO [  ]

The total number of shares outstanding of the registrants Common Stock as of
April 28, 2003 was 14,602,308 shares.



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TABLE OF CONTENTS



|                                                 |                                                                                                |                                                          |  |  |  |  |  | 
|------------------------------------------------ | ---------------------------------------------------------------------------------------------- | -------------------------------------------------------- |  |  |  |  |  | 
|FORWARD-LOOKING STATEMENTS                      
|                                                 |                                                                                                | Consolidated Balance Sheets                             
|                                                 |                                                                                                | Consolidated Statements of Operations                   
|                                                 |                                                                                                | Consolidated Statement of Change in Stockholders Equity
|                                                 |                                                                                                | Consolidated Statements of Cash Flows                   
|                                                 |                                                                                                | Notes to Condensed Consolidated Financial Statements    
|                                                 | Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                 | Item 3  Quantitative and Qualitative Disclosures about Market Risk                           
|                                                 | Item 4  Controls and Procedures                                                              
|PART II  OTHER INFORMATION                     
|                                                 | Item 1  Legal Proceedings                                                                    
|                                                 | Item 6  Exhibits and Reports on Form 8-K.                                                    
|SIGNATURES                                      
|CERTIFICATION                                   
|EXHIBIT INDEX                                   
|EX-10.bx Employment Agreement - Bruce E. Castle 
|EX-99.1 Certification of Chief Executive Officer
|EX-99.2 Certification of Chief Financial Officer



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##### Table of Contents



SBS Technologies, Inc. and Subsidiaries
Form 10-Q for the Quarter Ended March 31, 2003
Table of Contents

|                               |          |                                                                                             |    |      |    | 
|------------------------------ | -------- | ------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                               |          |                                                                                             |    | Page
|                               |          |                                                                                             |    |     
|Forward-Looking Statements     |          |                                                                                             | 2  |     
|PART I  FINANCIAL INFORMATION |          |                                                                                             |    |     
|                               | Item 1  | Unaudited Condensed Financial Statements                                                    |    |      |    | 
|                               |          | Consolidated Balance Sheets as of
March 31, 2003 and June 30, 2002                          |    |      | 3  | 
|                               |          | Consolidated Statements of Operations, Nine and
Three Months Ended March 31, 2003 and 2002  |    |      | 4  | 
|                               |          | Consolidated Statement of Changes in Stockholders Equity,
Nine Months Ended March 31, 2003 |    |      | 5  | 
|                               |          | Consolidated Statements of Cash Flows,
Nine Months Ended March 31, 2003 and 2002            |    |      | 6  | 
|                               |          | Notes to Condensed Consolidated Financial Statements
as of March 31, 2003                   |    |      | 8  | 
|                               | Item 2  | Managements Discussion and Analysis of Financial
Condition and Results of Operations       |    |      | 16 | 
|                               | Item 3
 | Quantitative and Qualitative Disclosures about Market Risk                                  |    |      | 24 | 
|                               | Item 4  | Controls and Procedures                                                                     |    |      | 24 | 
|PART II  OTHER INFORMATION    |          |                                                                                             |    |     
|                               | Item 1  | Legal Proceedings                                                                           |    |      | 25 | 
|                               | Item 6  | Exhibits and Reports on Form 8-K                                                            |    |      | 25 | 
|SIGNATURES                     |          |                                                                                             | 26 |     
|CERTIFICATIONS                 |          |                                                                                             | 27 |     
|EXHIBIT INDEX                  |          |                                                                                             | 29 |     





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FORWARD-LOOKING STATEMENTS

This Form 10-Q contains forward-looking statements with respect to the
financial condition, results of operations and business of SBS Technologies,
Inc. and subsidiaries (SBS or the Company). You may find many of these
statements by looking for words like intends, expects, projects,
believes, anticipates or similar expressions in this Form 10-Q. These
forward-looking statements include statements regarding future events and the
future financial performance of SBS, expected sales and gross margin for the
quarter ending June 30, 2003, expectations of internally-generated cash flows,
and the recording of any transitional impairment under Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible Assets in the
year ending June 30, 2003.

These statements are based upon certain assumptions and assessments made by the
Company in light of our experience and our perception of historical trends,
current conditions, expected future developments and other factors we believe
to be appropriate. These assumptions and assessments include the volume and
product mix of sales, estimates of costs and inventory and receivable levels
based on preliminary information, and other items.

The forward-looking statements included in this document are subject to a
number of risks, uncertainties, and other factors. Among these factors are:
business and economic conditions generally affecting our customers and their
end customers, including but not limited to the changes in size and program
priorities of military procurement budgets; a high degree of uncertainty and
rapid change in the markets addressed by our products; customer demand for and
acceptance of our products which may affect both sales and margins; our ability
to design, test and introduce new products on a timely basis; our technology
capabilities; the financial condition of our customers; and the other risk
factors listed under Risk Factors in the Companys Annual Report on Form 10-K
for the year ended June 30, 2002.

Because forward-looking statements are subject to risks and uncertainties,
actual results may differ materially from those expressed or implied by them.
SBS cautions you not to place undue reliance on these statements, which speak
only as of the date of this Form 10-Q.

SBS does not undertake any obligation to update publicly or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.

Page 2



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SBS Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
Thousands (except share amounts)
(Unaudited)

|                                     |                                                                                                                                                                    |  |        |                                            |   |           |         |          |   |  |         | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------ | ------------------------------------------ | - | --------- | ------- | -------- | - |  | ------- | 
|                                     |                                                                                                                                                                    |  |        |                                            |   | March 31, |         | June 30,
|                                     |                                                                                                                                                                    |  |        |                                            |   | 2003      |         | 2002    
|                                     |                                                                                                                                                                    |  |        |                                            |   |           |         |         
|Assets                               |                                                                                                                                                                    |  |        |                                            |   |           |         |         
|Current assets:                      |                                                                                                                                                                    |  |        |                                            |   |           |         |         
|                                     | Cash and cash equivalents                                                                                                                                          |  | $      | 28,899                                     |   |           |         | 24,811   |  
|                                     | Receivables, net                                                                                                                                                   |  |        | 22,146                                     |   |           |         | 22,619   |  
|                                     | Inventories                                                                                                                                                        |  |        | 17,807                                     |   |           |         | 18,428   |  
|                                     | Deferred income taxes                                                                                                                                              |  |        | 5,504                                      |   |           |         | 9,446    |  
|                                     | Income tax receivable                                                                                                                                              |  |        | 9,724                                      |   |           |         | 4,584    |  
|                                     | Prepaid expenses                                                                                                                                                   |  |        | 1,941                                      |   |           |         | 1,226    |  
|                                     | Other current assets                                                                                                                                               |  |        | 379                                        |   |           |         | 165      |  
|                                     |                                                                                                                                                                    |  |        |                                            |   |           |         |          |  
|                                     |                                                                                                                                                                    |  |        | Total current assets                       |   |           | 86,400  |          |   |  | 81,279  | 
|                                     |                                                                                                                                                                    |  |        |                                            |   |           |         |          |  
|Property and equipment, net          |                                                                                                                                                                    |  | 9,533  |                                            |   |           | 11,507  |         
|Goodwill, net                        |                                                                                                                                                                    |  | 21,414 |                                            |   |           | 20,468  |         
|Intangible assets, net               |                                                                                                                                                                    |  | 4,995  |                                            |   |           | 6,284   |         
|Deferred income taxes                |                                                                                                                                                                    |  | 4,383  |                                            |   |           | 5,703   |         
|Other assets                         |                                                                                                                                                                    |  | 380    |                                            |   |           | 407     |         
|                                     |                                                                                                                                                                    |  |        |                                            |   |           |         |         
|                                     |                                                                                                                                                                    |  |        | Total assets                               |   | $         | 127,105 |          |   |  | 125,648 | 
|                                     |                                                                                                                                                                    |  |        |                                            |   |           |         |         
|Liabilities and Stockholders Equity |                                                                                                                                                                    |  |        |                                            |   |           |         |         
|Current liabilities:                 |                                                                                                                                                                    |  |        |                                            |   |           |         |         
|                                     | Accounts payable                                                                                                                                                   |  | $      | 2,994                                      |   |           |         | 4,528    |  
|                                     | Accrued representative commissions                                                                                                                                 |  |        | 844                                        |   |           |         | 518      |  
|                                     | Accrued compensation                                                                                                                                               |  |        | 3,377                                      |   |           |         | 4,170    |  
|                                     | Other current liabilities                                                                                                                                          |  |        | 2,918                                      |   |           |         | 2,759    |  
|                                     |                                                                                                                                                                    |  |        |                                            |   |           |         |          |  
|                                     |                                                                                                                                                                    |  |        | Total current liabilities                  |   |           | 10,133  |          |   |  | 11,975  | 
|                                     |                                                                                                                                                                    |  |        |                                            |   |           |         |         
|Other long-term liabilities          |                                                                                                                                                                    |  | 27     |                                            |   |           | 27      |         
|                                     |                                                                                                                                                                    |  |        |                                            |   |           |         |         
|                                     |                                                                                                                                                                    |  |        | Total liabilities                          |   |           | 10,160  |          |   |  | 12,002  | 
|                                     |                                                                                                                                                                    |  |        |                                            |   |           |         |         
|Stockholders equity:                |                                                                                                                                                                    |  |        |                                            |   |           |         |         
|                                     | Common
stock, no par value; 200,000,000 shares authorized, 14,602,308 issued and outstanding at March 31, 2003, 14,628,709 issued and outstanding at June 30, 2002 |  |        | 86,341                                     |   |           |         | 86,338   |  
|                                     | Unearned compensation                                                                                                                                              |  |        | (65                                        | ) |           |         |         |  
|                                     | Accumulated other comprehensive loss                                                                                                                               |  |        | (1,246                                     | ) |           |         | (3,113   | )
|                                     | Retained earnings                                                                                                                                                  |  |        | 31,915                                     |   |           |         | 30,421   |  
|                                     |                                                                                                                                                                    |  |        |                                            |   |           |         |         
|                                     |                                                                                                                                                                    |  |        | Total stockholders equity                 |   |           | 116,945 |          |   |  | 113,646 | 
|                                     |                                                                                                                                                                    |  |        |                                            |   |           |         |         
|                                     |                                                                                                                                                                    |  |        | Total liabilities and stockholders equity |   | $         | 127,105 |          |   |  | 125,648 | 
|                                     |                                                                                                                                                                    |  |        |                                            |   |           |         |         

See accompanying notes to condensed consolidated financial statements

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SBS Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations
Thousands (except per share amounts)
(Unaudited)

|                                                       |                         |   |                   |        |                    |  |         |         |      |  |        |        |  |  |        |        |  
|------------------------------------------------------ | ----------------------- | - | ----------------- | ------ | ------------------ |  | ------- | ------- | ---- |  | ------ | ------ |  |  | ------ | ------ | -
|                                                       |                         |   | Nine Months Ended |        | Three Months Ended
|                                                       |                         |   | March 31,         |        | March 31,         
|                                                       |                         |   |                   |        |                   
|                                                       |                         |   | 2003              |        | 2002               |  | 2003    |         | 2002
|                                                       |                         |   |                   |        |                    |  |         |         |     
|Sales                                                  |                         | $ | 85,999            |        |                    |  | 90,475  |         |      |  | 28,906 |        |  |  | 29,694 |       
|Cost of sales                                          |                         |   | 43,309            |        |                    |  | 58,043  |         |      |  | 14,775 |        |  |  | 14,466 |       
|                                                       |                         |   |                   |        |                    |  |         |         |      |  |        |        |  |  |        |       
|                                                       | Gross profit            |   |                   | 42,690 |                    |  |         | 32,432  |      |  |        | 14,131 |  |  |        | 15,228 |  
|                                                       |                         |   |                   |        |                    |  |         |         |      |  |        |       
|Selling, general and administrative expense            |                         |   | 25,176            |        |                    |  | 28,650  |         |      |  | 8,409  |        |  |  | 9,965  |       
|Research and development expense                       |                         |   | 13,581            |        |                    |  | 13,396  |         |      |  | 4,160  |        |  |  | 4,621  |       
|Severance and other exit costs                         |                         |   | 598               |        |                    |  | 572     |         |      |  |       |        |  |  | 251    |       
|Impairment of intangible assets                        |                         |   |                  |        |                    |  | 2,682   |         |      |  |       |        |  |  |       |       
|Amortization of intangible assets                      |                         |   | 1,488             |        |                    |  | 5,658   |         |      |  | 452    |        |  |  | 1,805  |       
|                                                       |                         |   |                   |        |                    |  |         |         |      |  |        |        |  |  |        |       
|                                                       | Operating income (loss) |   |                   | 1,847  |                    |  |         | (18,526 | )    |  |        | 1,110  |  |  |        | (1,414 | )
|                                                       |                         |   |                   |        |                    |  |         |         |      |  |        |        |  |  |        |       
|Interest and other income, net                         |                         |   | 341               |        |                    |  | 421     |         |      |  | 116    |        |  |  | 144    |       
|Foreign exchange gains (losses)                        |                         |   | (54               | )      |                    |  | 24      |         |      |  | (28    | )      |  |  | (1     | )     
|                                                       |                         |   |                   |        |                    |  |         |         |      |  |        |        |  |  |        |       
|                                                       |                         |   | 287               |        |                    |  | 445     |         |      |  | 88     |        |  |  | 143    |       
|                                                       |                         |   |                   |        |                    |  |         |         |      |  |        |        |  |  |        |       
|Income (loss) before income taxes                      |                         |   | 2,134             |        |                    |  | (18,081 | )       |      |  | 1,198  |        |  |  | (1,271 | )     
|Income tax expense (benefit)                           |                         |   | 640               |        |                    |  | (6,957  | )       |      |  | 387    |        |  |  | (885   | )     
|                                                       |                         |   |                   |        |                    |  |         |         |      |  |        |        |  |  |        |       
|Net income (loss)                                      |                         | $ | 1,494             |        |                    |  | (11,124 | )       |      |  | 811    |        |  |  | (386   | )     
|                                                       |                         |   |                   |        |                    |  |         |         |      |  |        |        |  |  |        |       
|Net income (loss) per common share                     |                         | $ | 0.10              |        |                    |  | (0.76   | )       |      |  | 0.06   |        |  |  | (0.03  | )     
|                                                       |                         |   |                   |        |                    |  |         |         |      |  |        |        |  |  |        |       
|Net income (loss) per common share  assuming
dilution |                         | $ | 0.10              |        |                    |  | (0.76   | )       |      |  | 0.06   |        |  |  | (0.03  | )     
|                                                       |                         |   |                   |        |                    |  |         |         |      |  |        |        |  |  |        |       

See accompanying notes to condensed consolidated financial statements

Page 4



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SBS Technologies, Inc. and Subsidiaries
Consolidated Statement of Changes in Stockholders Equity
Thousands (except share amounts)
(Unaudited)

|                                            |                                          |  |            |   |          |   |               |   |               |  |          |   |        |  |        |       |  |  |        |   |  |  |         |       | 
|------------------------------------------- | ---------------------------------------- |  | ---------- | - | -------- | - | ------------- | - | ------------- |  | -------- | - | ------ |  | ------ | ----- |  |  | ------ | - |  |  | ------- | ----- | 
|                                            |                                          |  | Common     |   |          |   |               |   | Accumulated   |  |          |   |        |  | Total 
|                                            |                                          |  | stock      |   | Unearned |   | other         |   |               |  |          |   | stock-
|                                            |                                          |  |            |   | Compen-  |   | comprehensive |   | Retained      |  | holders
|                                            |                                          |  | Shares     |   | Amount   |   | sation        |   | income (loss) |  | earnings |   | equity
|                                            |                                          |  |            |   |          |   |               |   |               |  |          |   |       
|Balance at June 30, 2002                    |                                          |  | 14,628,709 |   |          | $ | 86,338        |   |               |  |         |   |        |  | (3,113 | )     |  |  | 30,421 |   |  |  | 113,646 |      
|Exercise of stock options                   |                                          |  | 5,560      |   |          |   | 13            |   |               |  |         |   |        |  |       |       |  |  |       |   |  |  | 13      |      
|Restricted stock awards issued to
directors |                                          |  | 14,039     |   |          |   | 311           |   |               |  | (109     | ) |        |  |       |       |  |  |       |   |  |  | 202     |      
|Stock-based compensation                    |                                          |  |           |   |          |   |              |   |               |  | 44       |   |        |  |       |       |  |  |       |   |  |  | 44      |      
|Stock repurchased and retired               |                                          |  | (46,000    | ) |          |   | (321          | ) |               |  |         |   |        |  |       |       |  |  |       |   |  |  | (321    | )    
|Net income                                  |                                          |  |           |   |          |   |              |   |               |  |         |   |        |  |       |       |  |  | 1,494  |   |  |  | 1,494   |      
|Other comprehensive income:                 |                                          |  |            |   |          |   |               |   |               |  |          |   |        |  |        |       |  |  |        |   |  |  |         |      
|                                            | Foreign currency
translation
adjustments |  |            |  |          |   |               |  |               |  |          |  |        |  |        | 1,867 |  |  |        |  |  |  |         | 1,867 | 
|                                            |                                          |  |            |   |          |   |               |   |               |  |          |   |        |  |        |       |  |  |        |   |  |  |         |      
|Balance at March 31, 2003                   |                                          |  | 14,602,308 |   |          | $ | 86,341        |   |               |  | (65      | ) |        |  | (1,246 | )     |  |  | 31,915 |   |  |  | 116,945 |      
|                                            |                                          |  |            |   |          |   |               |   |               |  |          |   |        |  |        |       |  |  |        |   |  |  |         |      

See accompanying notes to condensed consolidated financial statements

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SBS Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Thousands
(Unaudited)

|                                                  |                                                                                          |   |                                                         |                                           |   |                   |             |         |   |        |        |  
|------------------------------------------------- | ---------------------------------------------------------------------------------------- | - | ------------------------------------------------------- | ----------------------------------------- | - | ----------------- | ----------- | ------- | - | ------ | ------ | -
|                                                  |                                                                                          |   |                                                         |                                           |   | Nine months ended
|                                                  |                                                                                          |   |                                                         |                                           |   | March 31,        
|                                                  |                                                                                          |   |                                                         |                                           |   | 2003              |             | 2002   
|                                                  |                                                                                          |   |                                                         |                                           |   |                   |             |        
|Cash flows from operating activities:             |                                                                                          |   |                                                         |                                           |   |                   |             |        
|                                                  | Net income (loss)                                                                        |   | $                                                       | 1,494                                     |   |                   |             | (11,124 | )
|                                                  | Adjustments to reconcile net income (loss) to net cash provided by operating activities: |   |                                                         |                                           |   |                   |             |         |  
|                                                  |                                                                                          |   | Depreciation                                            |                                           |   | 3,001             |             |         |   | 2,778  |       
|                                                  |                                                                                          |   | Amortization of intangible assets                       |                                           |   | 1,488             |             |         |   | 5,658  |       
|                                                  |                                                                                          |   | Impairment of intangible assets                         |                                           |   |                  |             |         |   | 2,682  |       
|                                                  |                                                                                          |   | Bad debt expense                                        |                                           |   | 346               |             |         |   | 362    |       
|                                                  |                                                                                          |   | Deferred income taxes                                   |                                           |   | 5,309             |             |         |   | (6,673 | )     
|                                                  |                                                                                          |   | Income tax benefit of stock options exercised           |                                           |   |                  |             |         |   | 143    |       
|                                                  |                                                                                          |   | Gain on disposition of assets                           |                                           |   | (2                | )           |         |   | (7     | )     
|                                                  |                                                                                          |   | Foreign exchange (gains) losses                         |                                           |   | 55                |             |         |   | (24    | )     
|                                                  |                                                                                          |   | Stock-based compensation                                |                                           |   | 44                |             |         |   | 84     |       
|                                                  |                                                                                          |   | Stock issued to directors under restricted stock awards |                                           |   | 202               |             |         |   |       |       
|                                                  |                                                                                          |   | Changes in assets and liabilities:                      |                                           |   |                   |             |         |   |        |       
|                                                  |                                                                                          |   |                                                         | Receivables                               |   |                   | 476         |         |   |        | 1,871  |  
|                                                  |                                                                                          |   |                                                         | Inventories                               |   |                   | 996         |         |   |        | 19,476 |  
|                                                  |                                                                                          |   |                                                         | Income tax receivable                     |   |                   | (5,194      | )       |   |        | 484    |  
|                                                  |                                                                                          |   |                                                         | Prepaid expenses and other assets         |   |                   | (895        | )       |   |        | 407    |  
|                                                  |                                                                                          |   |                                                         | Accounts payable                          |   |                   | (1,426      | )       |   |        | 458    |  
|                                                  |                                                                                          |   |                                                         | Accrued representative commissions        |   |                   | 319         |         |   |        | (324   | )
|                                                  |                                                                                          |   |                                                         | Accrued compensation                      |   |                   | (850        | )       |   |        | (1,029 | )
|                                                  |                                                                                          |   |                                                         | Other current liabilities                 |   |                   | (76         | )       |   |        | 1,569  |  
|                                                  |                                                                                          |   |                                                         |                                           |   |                   |             |        
|                                                  |                                                                                          |   |                                                         | Net cash provided by operating activities |   |                   | 5,287       |         |   |        | 16,791 |  
|Cash flows from investing activities:             |                                                                                          |   |                                                         |                                           |   |                   |             |        
|                                                  | Business acquisition                                                                     |   |                                                         |                                          |   |                   |             | (1,034  | )
|                                                  | Acquisition of property and equipment                                                    |   |                                                         | (985                                      | ) |                   |             | (2,839  | )
|                                                  | Purchase of license agreement                                                            |   |                                                         | (200                                      | ) |                   |             |        |  
|                                                  |                                                                                          |   |                                                         |                                           |   |                   |             |        
|                                                  |                                                                                          |   |                                                         | Net cash used by investing activities     |   |                   | (1,185      | )       |   |        | (3,873 | )
|Cash flows from financing activities:             |                                                                                          |   |                                                         |                                           |   |                   |             |        
|                                                  | Payments on notes payable                                                                |   |                                                         |                                          |   |                   |             | (2,500  | )
|                                                  | Repurchase and retirement of common stock                                                |   |                                                         | (321                                      | ) |                   |             | (488    | )
|                                                  | Proceeds from exercise of stock options and warrants                                     |   |                                                         | 13                                        |   |                   |             | 1,394   |  
|                                                  |                                                                                          |   |                                                         |                                           |   |                   |             |        
|                                                  |                                                                                          |   |                                                         | Net cash used by financing activities     |   |                   | (308        | )       |   |        | (1,594 | )
|Effect of exchange rate changes on cash           |                                                                                          |   | 294                                                     |                                           |   |                   | (10         | )      
|                                                  |                                                                                          |   |                                                         |                                           |   |                   |             |        
|Net change in cash and cash equivalents           |                                                                                          |   | 4,088                                                   |                                           |   |                   | 11,314      |        
|Cash and cash equivalents at beginning of period  |                                                                                          |   | 24,811                                                  |                                           |   |                   | 9,734       |        
|                                                  |                                                                                          |   |                                                         |                                           |   |                   |             |        
|Cash and cash equivalents at end of period        |                                                                                          | $ | 28,899                                                  |                                           |   |                   | 21,048      |        
|                                                  |                                                                                          |   |                                                         |                                           |   |                   |             |        
|Supplemental disclosure of cash flow information: |                                                                                          |   |                                                         |                                           |   |                   |             |        
|                                                  | Interest paid                                                                            |   | $                                                       | 12                                        |   |                   |             | 15      |  
|                                                  |                                                                                          |   |                                                         |                                           |   |                   |             |        
|                                                  | Income taxes paid (received)                                                             |   | $                                                       | 528                                       |   |                   |             | (910    | )
|                                                  |                                                                                          |   |                                                         |                                           |   |                   |             |        
|                                                  |                                                                                          |   |                                                         |                                           |   |                   | (Continued) |        

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SBS Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows  Continued
Thousands
(Unaudited)

|                                                   |                      |                                   |                   |           |      |  |  |  |      |  
|-------------------------------------------------- | -------------------- | --------------------------------- | ----------------- | --------- | ---- |  |  |  | ---- | -
|                                                   |                      |                                   | Nine months ended
|                                                   |                      |                                   |                   | March 31,
|                                                   |                      |                                   | 2003              |           | 2002
|                                                   |                      |                                   |                   |           |     
|Summary of assets acquired and liabilities assumed |                      |                                   |                   |           |      |  |  | 
|                                                   | through acquisition: |                                   |                   |           |      |  |  |  |     
|                                                   |                      | Inventories                       | $                 |           |     |  |  |  | 681  |  
|                                                   |                      | Prepaid expenses and other assets |                   |           |     |  |  |  | 17   |  
|                                                   |                      | Property and equipment, net       |                   |           |     |  |  |  | 472  |  
|                                                   |                      | Deferred income taxes             |                   |           |     |  |  |  | 224  |  
|                                                   |                      | Identifiable intangible assets    |                   |           |     |  |  |  | 215  |  
|                                                   |                      | Accrued expenses                  |                   |           |     |  |  |  | (149 | )
|                                                   |                      | Deferred revenue                  |                   |           |     |  |  |  | (426 | )
|                                                   |                      |                                   |                   |           |     

See accompanying notes to condensed consolidated financial statements

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SBS Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2003
(Unaudited)

1)     Summary of Significant Accounting Policies



| |  | The accounting policies as set forth in SBS Technologies, Inc.s (SBS)
Annual Report on Form 10-K for the year ended June 30, 2002 have been
adhered to in preparing the accompanying interim condensed consolidated
financial statements except as amended for the following discussion on
accounting for goodwill. These statements are unaudited but include all
adjustments, consisting of normal recurring adjustments, that SBS considers
necessary for a fair presentation of the financial position, results of
operations, and cash flows for such interim periods. Results for such
interim periods are not necessarily indicative of results for a full year.
Certain reclassifications have been made to prior year balances to conform
to current year presentation.                                                                                                                                                                                                                                  
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company adopted Statement of Financial Accounting Standards No. 142,
Goodwill and Other Intangible Assets, (SFAS 142) on July 1, 2002. SFAS
142 eliminates the amortization of goodwill and other intangible assets
that have indefinite useful lives. Amortization will continue to be
recorded for intangible assets with finite useful lives. SFAS 142 also
requires at least an annual impairment review of goodwill and other
intangible assets. Any asset deemed to be impaired is to be written down to
its fair value. The Company completed step 1 of the required transitional
goodwill impairment analysis in accordance with SFAS 142 prior to December
31, 2002 and an indication of potential impairment was determined for
certain reporting units in the Commercial and Government Group and the
Communications and Enterprise Group. SBS will record any transitional
impairment charges after completion of step 2 of the required analysis in
the results for the year ending June 30, 2003.

2)     Receivables, net



| |  | Receivables, net consist of the following:
| |  | ------------------------------------------

|                                     |  |           |        |          |  |  |        |  
|------------------------------------ |  | --------- | ------ | -------- |  |  | ------ | -
|                                     |  | March 31, |        | June 30,
|Thousands                            |  | 2003      |        | 2002    
|                                     |  |           |        |         
|Accounts receivable                  |  | $         | 23,177 |          |  |  | 23,992 |  
|Less allowance for doubtful accounts |  |           | (1,031 | )        |  |  | (1,373 | )
|                                     |  |           |        |          |  |  |        |  
|                                     |  | $         | 22,146 |          |  |  | 22,619 |  
|                                     |  |           |        |          |  |  |        |  

3)     Inventories



| |  | Inventories consist of the following:
| |  | -------------------------------------

|                |  |           |        |          |  |  |        | 
|--------------- |  | --------- | ------ | -------- |  |  | ------ | 
|                |  | March 31, |        | June 30,
|Thousands       |  | 2003      |        | 2002    
|                |  |           |        |         
|Raw materials   |  | $         | 10,058 |          |  |  | 9,663  | 
|Work in process |  |           | 4,858  |          |  |  | 5,328  | 
|Finished goods  |  |           | 2,891  |          |  |  | 3,437  | 
|                |  |           |        |          |  |  |        | 
|                |  | $         | 17,807 |          |  |  | 18,428 | 
|                |  |           |        |          |  |  |        | 



| |  | For the nine and three month periods ended March 31, 2003, approximately
$742,000 and $192,000 of inventory previously written down to zero had been
sold.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------

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SBS Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements  Continued
March 31, 2003
(Unaudited)

4)     Goodwill and Intangible Assets



| |  | Effective July 1, 2002, SBS adopted SFAS 142, Goodwill and Other
Intangible Assets, and no longer amortizes goodwill. As of the date of
adoption, SBS had unamortized goodwill of approximately
$20.5 million subject to the transition provisions of SFAS 142, which
included $434,000 for the net book value of acquired assembled workforce
intangibles, as these assets did not meet the criteria for recognition
apart from goodwill. There was no goodwill amortization expense for the
nine-month and three-month periods ended March 31, 2003, whereas goodwill
amortization amounted to approximately $3.4 million and $1.1 million for
the nine and three month periods ended March 31, 2002.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The following table presents the impact of the adoption of SFAS 142 on
reported net income (loss) and net income (loss) per applicable common
share had SFAS 142 been in effect in fiscal 2002:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

|                                                 |                        |                 |       |                   |      |  |                    |        |       |  |      |      |   |  |      |       |     | 
|------------------------------------------------ | ---------------------- | --------------- | ----- | ----------------- | ---- |  | ------------------ | ------ | ----- |  | ---- | ---- | - |  | ---- | ----- | --- | 
|                                                 |                        |                 |       | Nine months ended |      |  | Three months ended
|                                                 |                        |                 |       | March 31,         |      |  | March 31,         
|Thousands - except                               |                        |                 |       |                   |     
|per share amounts                                |                        | 2003            |       |                   | 2002 |  |                    | 2003   |       |  | 2002
|                                                 |                        |                 |       |                   |      |  |                    |        |       |  |     
|Reported net income (loss)                       |                        | $               | 1,494 |                   |      |  | (11,124            | )      |       |  | 811  |      |   |  | (386 | )    
|                                                 |                        |                 |       |                   |      |  |                    |        |       |  |      |      |   |  |      |      
|Adjustments:                                     |                        |                 |       |                   |      |  |                    |        |       |  |      |      |   |  |      |      
|                                                 | Goodwill amortization  |                 |       |                  |      |  |                    | 3,377  |       |  |      |     |   |  |      | 1,045 |    
|                                                 | Workforce amortization |                 |       |                  |      |  |                    | 56     |       |  |      |     |   |  |      | 19    |    
|                                                 | Income tax affect      |                 |       |                  |      |  |                    | (1,321 | )     |  |      |     |   |  |      | (415  | )  
|                                                 |                        |                 |       |                   |      |  |                    |        |       |  |      |      |   |  |      |      
|                                                 |                        | Net adjustments |       |                   |     |  |                    |        | 2,112 |  |      |      |  |  |      |       | 649 | 
|                                                 |                        |                 |       |                   |      |  |                    |        |       |  |      |      |   |  |      |      
|Adjusted net income (loss)                       |                        | $               | 1,494 |                   |      |  | (9,012             | )      |       |  | 811  |      |   |  | 263  |      
|                                                 |                        |                 |       |                   |      |  |                    |        |       |  |      |      |   |  |      |      
|Net income (loss) per share:                     |                        |                 |       |                   |      |  |                    |        |       |  |      |      |   |  |      |      
|                                                 | Reported               |                 | $     | 0.10              |      |  |                    | (0.76  | )     |  |      | 0.06 |   |  |      | (0.03 | )  
|                                                 | Adjusted               |                 | $     | 0.10              |      |  |                    | (0.62  | )     |  |      | 0.06 |   |  |      | 0.02  |    
|Net income (loss) per share
 assuming dilution: |                        |                 |       |                   |      |  |                    |        |       |  |      |      |   |  |      |      
|                                                 | Reported               |                 | $     | 0.10              |      |  |                    | (0.76  | )     |  |      | 0.06 |   |  |      | (0.03 | )  
|                                                 | Adjusted               |                 | $     | 0.10              |      |  |                    | (0.62  | )     |  |      | 0.06 |   |  |      | 0.02  |    

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SBS Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements  Continued
March 31, 2003
(Unaudited)



| |  | The following table discloses information regarding the carrying amounts
and associated accumulated amortization for intangible assets subject to
amortization after the adoption of SFAS 142.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Amortized Intangible Assets

|                          |                      |        |       |                |        |             |       |              |       |   |       |   |       | 
|------------------------- | -------------------- | ------ | ----- | -------------- | ------ | ----------- | ----- | ------------ | ----- | - | ----- | - | ----- | 
|                          |                      |        |       | Gross carrying |        | Accumulated |       | Net carrying
|Thousands                 |                      | amount |       | amortization   |        | amount     
|                          |                      |        |       |                |        |            
|                          | As of March 31, 2003 |        |       |                |        |             |       |              |       |   |       |   |      
|Core-developed technology |                      | $      | 8,753 |                |        | $           | 5,440 |              |       | $ | 3,313 |  
|License agreements        |                      |        | 2,436 |                |        |             | 1,308 |              |       |   | 1,128 |  
|Covenant not-to-compete   |                      |        | 1,623 |                |        |             | 1,258 |              |       |   | 365   |  
|Other intangibles         |                      |        | 300   |                |        |             | 111   |              |       |   | 189   |  
|                          |                      |        |       |                |        |             |       |              |       |   |       |  
|                          |                      | Total  |       | $              | 13,112 |             |       | $            | 8,117 |   |       | $ | 4,995 | 
|                          |                      |        |       |                |        |             |       |              |       |   |       |  
|                          | As of June 30, 2002  |        |       |                |        |             |       |              |       |   |       |   |      
|Core-developed technology |                      | $      | 8,753 |                |        | $           | 4,723 |              |       | $ | 4,030 |  
|License agreements        |                      |        | 2,236 |                |        |             | 826   |              |       |   | 1,410 |  
|Covenant not-to-compete   |                      |        | 1,623 |                |        |             | 996   |              |       |   | 627   |  
|Other intangibles         |                      |        | 300   |                |        |             | 83    |              |       |   | 217   |  
|                          |                      |        |       |                |        |             |       |              |       |   |       |  
|                          |                      | Total  |       | $              | 12,912 |             |       | $            | 6,628 |   |       | $ | 6,284 | 
|                          |                      |        |       |                |        |             |       |              |       |   |       |  



| |  | The following table summarizes the amortization expense attributable to
intangible assets for the
nine-month and three-month periods ended March 31, 2003 and 2002.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                |  |  |  |  |  |  |  |  | 
|------------------------------- |  |  |  |  |  |  |  |  | 
|Aggregate amortization expense: |  |  |  |  |  |  |  | 

|                                   |                |  |           |       |  |    |   |  | 
|---------------------------------- | -------------- |  | --------- | ----- |  | -- | - |  | 
|                                   |                |  | Thousands |       |  |    |   | 
|For the nine-month periods ended:  |                |  |           |       |  |    |   | 
|                                   | March 31, 2003 |  | $         | 1,488 |  |    |   |  | 
|                                   | March 31, 2002 |  | $         | 5,658 |  | (a | ) |  | 
|For the three-month periods ended: |                |  |           |       |  |    |   | 
|                                   | March 31, 2003 |  | $         | 452   |  |    |   |  | 
|                                   | March 31, 2002 |  | $         | 1,805 |  | (a | ) |  | 

|    |  |                                                                                                                                                        
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Totals for the nine and three months
ended March 31, 2002 includes $3.4 million and $1.1
million, respectively, of goodwill and workforce
amortization.

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SBS Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements  Continued
March 31, 2003
(Unaudited)



| |  | The following table summarizes estimated amortization expense for the
fiscal years ending in June 2003 through 2007.
| |  | --------------------------------------------------------------------------------------------------------------------

|                                |               |           |   |       | 
|------------------------------- | ------------- | --------- | - | ----- | 
|Estimated amortization expense: |               | Thousands
|For the fiscal years ending:    |               |           |   |      
|                                | June 30, 2003 |           | $ | 1,940 | 
|                                | June 30, 2004 |           | $ | 1,673 | 
|                                | June 30, 2005 |           | $ | 1,271 | 
|                                | June 30, 2006 |           | $ | 847   | 
|                                | June 30, 2007 |           | $ | 719   | 



| |  | Changes in the carrying amount of goodwill for the nine-month period ended
March 31, 2003 are as follows:
| |  | ---------------------------------------------------------------------------------------------------------

Total Goodwill by Operating Segment

|                          |                                          |       |                |       |                |       |        |     |  |  |        |     | 
|------------------------- | ---------------------------------------- | ----- | -------------- | ----- | -------------- | ----- | ------ | --- |  |  | ------ | --- | 
|                          |                                          |       | Communications |       | Commercial and |       |        |     | 
|                          |                                          |       | and Enterprise |       | Government     |       |        |     | 
|Thousands                 |                                          | Group |                | Group |                | Total
|                          |                                          |       |                |       |                |      
|Balance at June 30, 2002  |                                          | $     | 3,448          |       |                |       | 17,020 |     |  |  | 20,468 |    
|                          | Foreign currency
translation
adjustments |       |                |      |                |       |        | 946 |  |  |        | 946 | 
|                          |                                          |       |                |       |                |       |        |     |  |  |        |    
|Balance at March 31, 2003 |                                          | $     | 3,448          |       |                |       | 17,966 |     |  |  | 21,414 |    
|                          |                                          |       |                |       |                |       |        |     |  |  |        |    

5)     Earnings Per Share



| |  | Net income (loss) per common share is based on weighted average shares
outstanding. Net income (loss) per common share  assuming dilution
includes the dilutive effects of potential common shares outstanding during
the period.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                   |  |                   |        |      |                    |      |         |      |  |  |        |  |  |  |        |  
|---------------------------------------------------------------------------------- |  | ----------------- | ------ | ---- | ------------------ | ---- | ------- | ---- |  |  | ------ |  |  |  | ------ | -
|                                                                                   |  | Nine months ended |        |      | Three months ended
|                                                                                   |  | March 31,         |        |      | March 31,         
|Thousands                                                                          |  |                   |        |      |                   
|except per share amounts                                                           |  | 2003              |        | 2002 |                    | 2003 |         | 2002
|                                                                                   |  |                   |        |      |                    |      |         |      |  | 
|Net Income (Loss) Per
Common Share                                                 |  |                   |        |      |                    |      |         |      |  |  |        |  |  |  |        |  
|Net income (loss)                                                                  |  | $                 | 1,494  |      |                    |      | (11,124 | )    |  |  | 811    |  |  |  | (386   | )
|                                                                                   |  |                   |        |      |                    |      |         |      |  |  |        |  |  |  |        |  
|Weighted-average common
shares outstanding used
in earnings per share
computations |  |                   | 14,605 |      |                    |      | 14,545  |      |  |  | 14,602 |  |  |  | 14,584 |  
|                                                                                   |  |                   |        |      |                    |      |         |      |  |  |        |  |  |  |        |  
|Net income (loss) per
common share                                                 |  | $                 | 0.10   |      |                    |      | (0.76   | )    |  |  | 0.06   |  |  |  | (0.03  | )
|                                                                                   |  |                   |        |      |                    |      |         |      |  |  |        |  |  |  |        |  

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SBS Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements  Continued
March 31, 2003
(Unaudited)

|                                                                                   |  |                   |        |      |                    |      |         |      |  |  |        |  |  |  |        |  
|---------------------------------------------------------------------------------- |  | ----------------- | ------ | ---- | ------------------ | ---- | ------- | ---- |  |  | ------ |  |  |  | ------ | -
|                                                                                   |  | Nine months ended |        |      | Three months ended
|                                                                                   |  | March 31,         |        |      | March 31,         
|Thousands                                                                          |  |                   |        |      |                   
|except per share amounts                                                           |  | 2003              |        | 2002 |                    | 2003 |         | 2002
|                                                                                   |  |                   |        |      |                    |      |         |      |  | 
|Net Income (Loss) Per
Common Share  Assuming
Dilution                             |  |                   |        |      |                    |      |         |      |  |  |        |  |  |  |        |  
|Net income (loss)                                                                  |  | $                 | 1,494  |      |                    |      | (11,124 | )    |  |  | 811    |  |  |  | (386   | )
|                                                                                   |  |                   |        |      |                    |      |         |      |  |  |        |  |  |  |        |  
|Weighted-average common
shares outstanding used
in earnings per share
computations |  |                   | 14,631 |      |                    |      | 14,545  |      |  |  | 14,628 |  |  |  | 14,584 |  
|                                                                                   |  |                   |        |      |                    |      |         |      |  |  |        |  |  |  |        |  
|Net income (loss) per
common share  assuming
dilution                             |  | $                 | 0.10   |      |                    |      | (0.76   | )    |  |  | 0.06   |  |  |  | (0.03  | )
|                                                                                   |  |                   |        |      |                    |      |         |      |  |  |        |  |  |  |        |  
|Shares Used in Net
Income (Loss) per Share
Computations                            |  |                   |        |      |                    |      |         |      |  |  |        |  |  |  |        |  
|Average outstanding
common shares                                                  |  |                   | 14,605 |      |                    |      | 14,545  |      |  |  | 14,602 |  |  |  | 14,584 |  
|Incremental shares from
assumed conversions 
potential common shares              |  |                   | 26     |      |                    |      |        |      |  |  | 26     |  |  |  |       |  
|                                                                                   |  |                   |        |      |                    |      |         |      |  |  |        |  |  |  |        |  
|Shares used in net
income (loss) per
common share  assuming
dilution computations |  |                   | 14,631 |      |                    |      | 14,545  |      |  |  | 14,628 |  |  |  | 14,584 |  
|                                                                                   |  |                   |        |      |                    |      |         |      |  |  |        |  |  |  |        |  



| |  | Due to the reported net loss for the nine and three months ended March 31,
2002, 281,304 and 240,348 potential common shares, respectively, were not
included in the computation of net loss per common
share  assuming dilution because the effect would be anti-dilutive. For
the nine and three months ended March 31, 2003, options to purchase
3,276,063 and 3,293,689 shares of common stock, respectively, and for the
nine and three months ended March 31, 2002, options to purchase 2,549,324
and 2,033,432 shares of common stock, respectively, were outstanding but
were not included in the computation of net income (loss) per common share
 assuming dilution because the options exercise prices were greater than
the average market price of the common shares.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6)     Comprehensive Income (Loss)



| |  | Comprehensive income for the nine and three months ended March 31, 2003 was
$3.4 million and $1.5 million respectively. Comprehensive loss for the nine and three
months ended March 31, 2002 was $(10.7) million and $(0.7) million,
respectively. The difference between comprehensive income (loss) and net
income (loss) was related to foreign currency translation adjustments.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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SBS Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements  Continued
March 31, 2003
(Unaudited)

7)     Segment Financial Data



| |  | The Company operates worldwide through two operating segments: the
Communications and Enterprise Group and the Commercial and Government
Group. The Communications and Enterprise Group consists of SBS
Technologies, Inc., Communications and Enterprise Group (formerly SBS
Technologies, Inc., Communications Products into which SDL Communications,
Inc. and SBS Technologies, Inc., Industrial Computers were merged in
September 2002). The Commercial and Government Group consists of SBS
Technologies, Inc., Commercial Group, SBS Technologies, Inc., Government
Group (formerly SBS Technologies, Inc., Embedded Computers and SBS
avionics and telemetry division, the assets of which were conveyed to SBS
Technologies, Inc., Government Group from SBS Technologies, Inc. in July
2002), SBS Technologies GmbH & Co. KG and ortec Electronic Assembly GmbH.
These segments are based on the markets that are served and the products
that are provided to those markets. Each segment has its own sales and
distribution channels and a manager who reports directly to the President
and Chief Operating Officer. Reportable segments for all periods presented
have been reclassified to conform to the current segment reporting
structure.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | SBS measures the results of operations for segments based on income (loss)
before income taxes and prior to allocation of corporate overhead expenses
other than marketing costs, the majority of amortization associated with
acquisitions and substantially all interest income and expense. The
accounting policies used to measure segment results of operations are the
same as those referred to in Note 1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|                                            |  |  |      |  |  |                |        |              |  |                 |        |       |  |  |         |   |  |  |         |  
|------------------------------------------- |  |  | ---- |  |  | -------------- | ------ | ------------ |  | --------------- | ------ | ----- |  |  | ------- | - |  |  | ------- | -
|                                            |  |  |      |  |  | Communications |        | Commercial & |  |                 |        |       |  |  |         |  
|                                            |  |  |      |  |  | & Enterprise   |        | Government   |  | Corporate &     |        |       |  | 
|Thousands                                   |  |  |      |  |  | Group          |        | Group        |  | Unallocated (1) |        | Total
|                                            |  |  |      |  |  |                |        |              |  |                 |        |      
|Nine-month periods ended March 31           |  |  |      |  |  |                |        |              |  |                 |        |       |  |  |         |   |  |  |         |  
|Gross Sales                                 |  |  | 2003 |  |  |                | 18,901 |              |  |                 | 67,339 |       |  |  |        |   |  |  | 86,240  |  
|Inter-segment sales                         |  |  |      |  |  |                | (26    | )            |  |                 | (215   | )     |  |  |        |   |  |  | (241    | )
|                                            |  |  |      |  |  |                |        |              |  |                 |        |       |  |  |         |   |  |  |         |  
|Sales to external customers                 |  |  |      |  |  |                | 18,875 |              |  |                 | 67,124 |       |  |  |        |   |  |  | 85,999  |  
|                                           
|Gross Sales                                 |  |  | 2002 |  |  |                | 29,708 |              |  |                 | 63,914 |       |  |  |        |   |  |  | 93,622  |  
|Inter-segment sales                         |  |  |      |  |  |                | (291   | )            |  |                 | (2,856 | )     |  |  |        |   |  |  | (3,147  | )
|                                            |  |  |      |  |  |                |        |              |  |                 |        |       |  |  |         |   |  |  |         |  
|Sales to external customers                 |  |  |      |  |  |                | 29,417 |              |  |                 | 61,058 |       |  |  |        |   |  |  | 90,475  |  
|                                           
|Segment profit (income
(loss) before taxes) |  |  | 2003 |  |  |                | (3,000 | )            |  |                 | 14,629 |       |  |  | (9,495  | ) |  |  | 2,134   |  
|                                            |  |  | 2002 |  |  |                | (9,359 | )            |  |                 | 8,903  |       |  |  | (17,625 | ) |  |  | (18,081 | )

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##### Table of Contents



SBS Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements  Continued
March 31, 2003
(Unaudited)

|                                            |                |  |      |  |  |       |                |        |              |                 |             |        |  |  |        |        |  |  |        |         | 
|------------------------------------------- | -------------- |  | ---- |  |  | ----- | -------------- | ------ | ------------ | --------------- | ----------- | ------ |  |  | ------ | ------ |  |  | ------ | ------- | 
|                                            |                |  |      |  |  |       | Communications |        | Commercial & |                 |             |        |  |  |        |        | 
|                                            |                |  |      |  |  |       | & Enterprise   |        | Government   |                 | Corporate & |        |  |  |       
|Thousands                                   |                |  |      |  |  | Group |                | Group  |              | Unallocated (1) |             | Total 
|                                            |                |  |      |  |  |       |                |        |              |                 |             |       
|Three-month periods ended March 31          |                |  |      |  |  |       |                |        |              |                 |             |        |  |  |        |        |  |  |        |        
|Gross Sales                                 |                |  | 2003 |  |  |       | 6,565          |        |              |                 | 22,507      |        |  |  |       |        |  |  | 29,072 |        
|Inter-segment sales                         |                |  |      |  |  |       | (8             | )      |              |                 | (158        | )      |  |  |       |        |  |  | (166   | )      
|                                            |                |  |      |  |  |       |                |        |              |                 |             |        |  |  |        |        |  |  |        |        
|Sales to external customers                 |                |  |      |  |  |       | 6,557          |        |              |                 | 22,349      |        |  |  |       |        |  |  | 28,906 |        
|                                            |                |  |      |  |  |       |                |        |              |                 |             |       
|Gross Sales                                 |                |  | 2002 |  |  |       | 9,953          |        |              |                 | 20,938      |        |  |  |       |        |  |  | 30,891 |        
|Inter-segment sales                         |                |  |      |  |  |       | (80            | )      |              |                 | (1,117      | )      |  |  |       |        |  |  | (1,197 | )      
|                                            |                |  |      |  |  |       |                |        |              |                 |             |        |  |  |        |        |  |  |        |        
|Sales to external customers                 |                |  |      |  |  |       | 9,873          |        |              |                 | 19,821      |        |  |  |       |        |  |  | 29,694 |        
|                                            |                |  |      |  |  |       |                |        |              |                 |             |       
|Segment profit (income
(loss) before taxes) |                |  | 2003 |  |  |       | (276           | )      |              |                 | 4,710       |        |  |  | (3,236 | )      |  |  | 1,198  |        
|                                            |                |  | 2002 |  |  |       | (668           | )      |              |                 | 4,359       |        |  |  | (4,962 | )      |  |  | (1,271 | )      
|Total Assets                                |                |  |      |  |  |       |                |        |              |                 |             |        |  |  |        |        |  |  |        |        
|                                            | March 31, 2003 |  |      |  |  |       |                | 12,223 |              |                 |             | 38,735 |  |  |        | 76,147 |  |  |        | 127,105 | 
|                                            | June 30, 2002  |  |      |  |  |       |                | 15,465 |              |                 |             | 35,217 |  |  |        | 74,966 |  |  |        | 125,648 | 

|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) |  | The corporate and unallocated column includes amounts for corporate items. With regard to results of
operations, corporate and unallocated includes corporate overhead expenses other than corporate marketing costs,
substantially all interest expense and interest income, and substantially all amortization associated with
acquisitions. Corporate assets primarily include cash and cash equivalents, deferred and current income tax
assets, goodwill and intangible assets.

8)     Severance and Other Exit Costs



| |  | For the nine months ended March 31, 2003, SBS recorded employee severance
and other exit costs of $598,000, which includes lease termination fees of
approximately $186,000 in connection with the closure of certain locations.
Due to the depressed economic and market conditions facing our
Communications and Enterprise Group, on July 22, 2002, SBS notified 19 full
and part-time employees at our Madison, Wisconsin engineering design center
that their jobs had been eliminated. Additionally, for the same reason, on
September 30, 2002, SBS notified 22 employees of the Communications and
Enterprise Group that their jobs were being eliminated. Also, during the
nine months ended March 31, 2003, severance costs were incurred for 12
other employees who were notified that their jobs had been eliminated. As
of March 31, 2003, all of the severance and other exit costs had been paid.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | During the year ended June 30, 2002, based on unfavorable economic and
market conditions, facility consolidation actions, and the decision to exit
the legacy PCI Chassis product line, SBS reduced its employee base,
resulting in elimination of 159 positions in manufacturing, research and
development, administration, and sales and marketing. As a result, for the
year ended June 30, 2002, employee severance and other termination charges
of approximately $1,253,000 were recorded. As of
March 31, 2003, cash payments of $1,219,000 had been made and $34,000 of
the original charge was reversed as a result of the decision not to
terminate certain originally notified employees.                                                                                                                                                                                                            

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SBS Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements  Continued
March 31, 2003
(Unaudited)

9)     Stock-Based Compensation



| |  | On January 1, 2003, the Company adopted SFAS 148, Accounting for
Stock-Based Compensation  Transition and Disclosure, which amends the
disclosure requirements of SFAS 123, Accounting for Stock-Based
Compensation, to require prominent disclosures in both annual and
interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on
reported results. The Company accounts for stock-based employee
compensation plans under the recognition and measurement principles of
APB Opinion No. 25, Accounting for Stock Issued to Employees, and
related Interpretations. All stock options granted had an exercise price
equal to the market value of the underlying common stock on the date of
grant. The stock-based compensation reflected in the financial
statements relates to restricted stock award grants to members of the
Companys Board of Directors. The following table illustrates the effect
on net income and net income per share if the company had applied the
fair value recognition provisions of SFAS 123 to stock-based employee
compensation.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                      |             |      |                   |       |                    |      |         |       |   |  |      |      |  |  |        |       |  
|------------------------------------------------------------------------------------------------------------------------------------- | ----------- | ---- | ----------------- | ----- | ------------------ | ---- | ------- | ----- | - |  | ---- | ---- |  |  | ------ | ----- | -
|                                                                                                                                      |             |      | Nine months ended |       | Three months ended
|                                                                                                                                      |             |      | March 31,         |       | March 31,         
|Thousands                                                                                                                             |             |      |                   |      
|except per share amounts                                                                                                              |             | 2003 |                   | 2002  |                    | 2003 |         | 2002 
|                                                                                                                                      |             |      |                   |       |                    |      |         |      
|Net income (loss), as reported                                                                                                        |             | $    | 1,494             |       |                    |      | (11,124 | )     |   |  | 811  |      |  |  | (386   | )    
|Add: stock-based employee
compensation expense included
in reported net income, net
of related tax effects                            |             |      | 27                |       |                    |      | 51      |       |   |  | 17   |      |  |  | 17     |      
|Deduct: stock-based employee
compensation expense
determined under fair value
based method for all awards,
net of related tax effects |             |      | (2,641            | )     |                    |      | (4,844  | )     |   |  | (753 | )    |  |  | (1,191 | )    
|                                                                                                                                      |             |      |                   |       |                    |      |         |       |   |  |      |      |  |  |        |      
|Pro forma net income (loss)                                                                                                           |             | $    | (1,120            | )     |                    |      | (15,917 | )     |   |  | 75   |      |  |  | (1,560 | )    
|                                                                                                                                      |             |      |                   |       |                    |      |         |       |   |  |      |      |  |  |        |      
|Net income (loss) per share:                                                                                                          |             |      |                   |       |                    |      |         |       |   |  |      |      |  |  |        |      
|                                                                                                                                      | As reported |      | $                 | 0.10  |                    |      |         | (0.76 | ) |  |      | 0.06 |  |  |        | (0.03 | )
|                                                                                                                                      |             |      |                   |       |                    |      |         |       |   |  |      |      |  |  |        |      
|                                                                                                                                      | Pro forma   |      | $                 | (0.08 | )                  |      |         | (1.09 | ) |  |      | 0.01 |  |  |        | (0.11 | )
|                                                                                                                                      |             |      |                   |       |                    |      |         |       |   |  |      |      |  |  |        |      
|Net income (loss) per share,
assuming dilution:                                                                                       |             |      |                   |       |                    |      |         |       |   |  |      |      |  |  |        |      
|                                                                                                                                      | As reported |      | $                 | 0.10  |                    |      |         | (0.76 | ) |  |      | 0.06 |  |  |        | (0.03 | )
|                                                                                                                                      |             |      |                   |       |                    |      |         |       |   |  |      |      |  |  |        |      
|                                                                                                                                      | Pro forma   |      | $                 | (0.08 | )                  |      |         | (1.09 | ) |  |      | 0.01 |  |  |        | (0.11 | )
|                                                                                                                                      |             |      |                   |       |                    |      |         |       |   |  |      |      |  |  |        |      

10)      Subsequent Event



| |  | On April 28, 2003, a third party (Target), in connection with a potential
acquisition by SBS, entered into a promissory note payable to SBS. Under
the terms of the note, SBS, in its sole discretion, may advance funds to
Target in an amount not to exceed $250,000 on or prior to May 27, 2003.
Funds advanced are collateralized by certain assets of Target. On April 30,
2003 and May 13, 2003, SBS advanced $100,000 and $75,000,
respectively, to Target.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of Financial
Condition and Results of Operations
March 31, 2003




Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations

For a description of the Companys critical accounting policies and an
understanding of the significant factors that influenced the Companys
performance during the nine and three months ended March 31, 2003 and 2002,
this Managements Discussion and Analysis of Financial Condition and Results
of Operations (MD&A) should be read in conjunction with the consolidated
financial statements, including the related notes, appearing in Item 1 of this
Form 10-Q as well as our Annual Report on Form 10-K for the year ended June 30,
2002.

Company Overview

We design and build open-architecture embedded computer products that enable
original equipment manufacturers (OEM) to serve the commercial, communication,
enterprise and government markets. Our products are integrated into a variety
of applications, including communication networking, medical imaging,
industrial automation, and military systems. The portfolio includes an
extensive line of CPU boards, computer interconnections, avionics, telemetry,
and fully integrated systems and enclosures. Our objective is to continue to
capitalize on our design expertise and customer service capabilities to enhance
product quality and reduce time to market for OEM customers. We have grown, and
intend to continue to grow, through a combination of internal growth and
acquisitions. We completed ten acquisitions from fiscal 1992 to fiscal 2002
that broadened our product offerings and customer base. We achieve internal
growth by expanding our existing product lines through new product development,
through increasing penetration of our existing customer base, and by adding new
customers.

Sales for the nine-month period ended March 31, 2003 were $86.0 million, a 4.9%
decrease from the
$90.5 million in sales for the nine-month period ended March 31, 2002. Net
income for the nine-month period ended March 31, 2003 was $1.5 million, or net
income per common share  assuming dilution of $0.10. This compares to a net
loss for the nine-month period ended March 31, 2002 of $(11.1) million, or net
loss per common share  assuming dilution of $(0.76).

Sales for the three-month period ended March 31, 2003, were $28.9 million, a
2.7% decrease from the $29.7 million in sales for the three-month period ended
March 31, 2002. Net income for the three-month period ended March 31, 2003 was
$811,000, or net income per common share  assuming dilution of $0.06. This
compares to a net loss for the three-month period ended March 31, 2002 of
$(386,000), or net loss per common share  assuming dilution of $(0.03).

Consistent with our press release dated April 24, 2003, the continuing economic
conditions and uncertainties in the markets we serve make short and long-term
visibility difficult. As a result, we expect sales for the quarter ending June
30, 2003, to be similar to or slightly less than sales for the third quarter
ended March 31, 2003. Further, we anticipate completing step 2 of the transitional
impairment analysis required by SFAS 142 and we will record any impairment
charge in the financial statements for the fiscal year ending June 30, 2003.

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SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Continued
March 31, 2003

Results of Operations
(references to fiscal 2003 and fiscal 2002 relate to interim and annual periods
of the fiscal years ending on June 30)

Nine Months Ended March 31, 2003 Compared To Nine Months Ended March 31, 2002

Sales.For the nine-month period ended March 31, 2003, sales decreased 4.9%,
or $4.5 million, from $90.5 million for the nine-month period ended March 31,
2002, to $86.0 million. Sales for the Communications and Enterprise Group were
down 36%, or $10.5 million, from $29.4 million in fiscal 2002, to $18.9 million
as we continue to experience the effects of economic and market conditions
negatively impacting our telecommunications infrastructure customers. Sales
for the Commercial and Government Group increased 10%, or $6.0 million, to
$67.1 million for the nine-month period ended March 31, 2003, from sales for
the comparable period in fiscal 2002 of $61.1 million. We expect consolidated
sales for the quarter ending June 30, 2003 to be similar to or slightly less
than sales for the quarter ended March 31, 2003; however, actual results may
vary.

Gross Profit.For the nine-month period ended March 31, 2003, gross profit
increased 31.6%, or
$10.3 million, from $32.4 million for the nine-month period ended March 31,
2002, to $42.7 million. The increase in gross profit was primarily due to
significant inventory write-downs and other charges recorded in fiscal 2002
that were not present in fiscal 2003. In fiscal 2002, a $12.4 million
inventory write-down and $185,000 of expenditures associated with our
manufacturing consolidation and cost reduction efforts were recorded. The
write-down consisted of inventory associated with programs that were not
anticipated to come back to their previous forecasts, inventory associated with
our decision to exit the legacy PCI chassis product line, and inventory
associated with products that we will no longer market. Additionally, the
implementation of a new inventory management methodology associated with the
consolidation of our manufacturing operations contributed to the inventory
write-down in fiscal 2002. The consolidation efforts and new inventory
methodology resulted in a reduction in required inventory levels. During the
nine-month period ended March 31, 2003, we consumed approximately $742,000 of
inventory that had been written down to zero cost during fiscal 2002,
increasing gross margin as a percentage of sales by approximately 0.8%. Gross
profit as a percent of sales for the nine-month period ended March 31, 2003 was
49.6%, which is consistent with fiscal 2002 at 49.7% (excluding the $12.6
million of charges noted above). Based on managements sales projections for
the fourth quarter of fiscal 2003, gross profit as a percentage of sales is
expected to be similar to the percentage experienced in the three-months ended

March 31, 2003; however, actual results may vary.

Selling, General and Administrative Expense.For the nine-month period ended
March 31, 2003, selling, general and administrative (SG&A) expense decreased
12.1%, or $3.5 million from $28.6 million for the nine-month period ended March
31, 2002, to $25.2 million. This decrease was primarily due to the continued
benefits realized from cost reduction efforts implemented in prior quarters.
SG&A expense as a percentage of sales decreased to 29.3% in the nine month
period ended March 31, 2003 from 31.7% in the nine-month period ended March 31,
2002, primarily as a result of the cost reduction efforts, partially offset by
reduced sales levels.

Research and Development Expense.For the nine-month period ended March 31,
2003, research and development (R&D) expense increased 1.4%, or $185,000 from
$13.4 million for the nine-month period ended March 31, 2002, to $13.6 million.
This increase was primarily due to the addition of research and development
employees resulting from the acquisition of the assets of Essential
Communications completed on March 4, 2002. For the nine-month period ended
March 31, 2003, R&D expense as a percentage of sales

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SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Continued
March 31, 2003

increased to 15.8% from 14.8% in the nine-month period ended March 31, 2002,
primarily due to the decrease in sales volume.

Severance and Other Exit Costs.For the nine-months ended March 31, 2003, we
recorded severance and other exit costs of $598,000, which included lease
termination costs of approximately $186,000 paid as a result of our decision to
exit certain locations. Due to the economic and market conditions facing our
Communications and Enterprise Group, on July 22, 2002, we notified 19 full and
part-time employees at our Madison, Wisconsin engineering design center that
their jobs had been eliminated. Additionally, for the same reason, on
September 30, 2002, we notified 22 employees of the Communications and
Enterprise Group that their jobs were being eliminated. Also, during the nine
months ended March 31, 2003, severance costs were incurred for 12 other
employees who were notified that their jobs had been eliminated. As of
March 31, 2003, there were no severance and other exit costs remaining to be
paid from the exit plans discussed previously.

Impairment of Assets. There was no asset impairment charges recorded in the
nine-month period ended March 31, 2003. For the nine-month period ended March
31, 2002, the $2.7 million asset impairment charge represented the write-off of
the remaining goodwill recorded in connection with the acquisition of
Industrial Computers (formerly Micro Alliance) in November 1997. The write-off
was due to our decision to exit the PCI chassis business in the quarter ended
December 31, 2001.

Amortization of Intangible Assets.For the nine-month period ended March 31,
2003, amortization of intangible assets was $1.5 million, compared to $5.7
million for the same period of fiscal 2002. Effective July 1, 2002, we adopted
SFAS 142, Goodwill and Other Intangible Assets, and no longer amortize
goodwill. As of the date of adoption, we had unamortized goodwill of
approximately $20.5 million, subject to the transition provisions of SFAS 142.
There was no goodwill amortization expense in fiscal 2003, whereas goodwill
amortization amounted to approximately $3.4 million for the nine-month period
ended March 31, 2002.

Interest and Other Income (Expense), Net.For the nine-month period ended
March 31, 2003, net interest and other income of $341,000 consisted primarily
of interest income associated with surplus cash. For the nine-month period
ended March 31, 2002, net interest and other income of $421,000 consisted
primarily of a recovery from insurance of $307,000, and interest income
associated with surplus cash, partially offset by a $323,000 charge related to
an other-than-temporary decline in our investment in a software company.

Income Tax Expense (Benefit).For the nine-month periods ended March 31, 2003
and 2002, income tax expense (benefit) represented effective rates of 30.0% and
(38.5)%, respectively. The change in the effective income tax rate was due to
the impact of a shift in the mix of pre-tax income from domestic and foreign
sources coupled with benefits realized from tax planning strategies in excess
of previous estimates. We recorded a tax benefit related to the net loss in
fiscal 2002 due to our ability to realize the benefit through a tax loss carry
back to prior periods.

Earnings Per Share.For the nine-month period ended March 31, 2003, net income
per common share was $0.10 compared to a net loss per share of $(0.76) for the
same period in fiscal 2002. For the nine-month period ended March 31, 2003,
net income per common share  assuming dilution was $0.10 compared to a net
loss per common share  assuming dilution of $(0.76) for the nine-month period
ended March 31, 2002.

Review of Business Segments

The Company operates internationally through two operating segments: the
Communications and Enterprise Group and the Commercial and Government Group.
The Communications and Enterprise Group consists of

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SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Continued
March 31, 2003

SBS Technologies, Inc., Communications and Enterprise Group (formerly SBS
Technologies, Inc., Communications Products into which SDL Communications, Inc.
and SBS Technologies, Inc., Industrial Computers were merged in September
2002). The Commercial and Government Group consists of SBS Technologies, Inc.,
Commercial Group, SBS Technologies, Inc., Government Group (formerly SBS
Technologies, Inc., Embedded Computers and SBS avionics and telemetry
division, the assets of which were conveyed to SBS Technologies, Inc.,
Government Group from SBS Technologies, Inc. in July 2002), SBS Technologies
GmbH & Co. KG and ortec Electronic Assembly GmbH. These segments are based on
the markets that are served and the products that are provided to those
markets. Each segment has its own sales and distribution channels and a
manager who reports directly to the President and Chief Operating Officer.

The following is a discussion of sales to external customers and segment profit
(loss) for each reportable segment. In the measure of segment profit (loss)
(Segment Profit (Loss)), we do not allocate the following to these segments:



| |  |  | a majority of the amortization expense associated with acquisitions,
| | - |  | --------------------------------------------------------------------
| |  |  | substantially all interest income earned on cash balances, and      
| |  |  | corporate overhead costs, excluding corporate marketing costs.      

Communications and Enterprise Group

|                  |  |                   |  |                |  |  |  | 
|----------------- |  | ----------------- |  | -------------- |  |  |  | 
|Nine months ended |  | Sales to External |  | Segment Profit
|March 31,         |  | Customers         |  | (Loss)        
|                  |  |                   |  |               
|FY03              |  | $18.9 million     |  | $(3.0) million
|FY02              |  | $29.4 million     |  | $(9.4) million

For the nine-month period ended March 31, 2003, Communications and Enterprise
Group sales to external customers decreased 35.8%, or $10.5 million compared to
the same period of fiscal 2002. This decrease was due principally to the
economic and market conditions negatively affecting this Group. We continue to
experience the effects of reduced booking activities compared to prior periods,
delays of existing backlog orders and prior order cancellations by our
telecommunications infrastructure customers. We expect sales for the quarter
ending June 30, 2003 to be similar to or slightly less than sales for the
quarter ended March 31, 2003; however, actual results may vary.

For the nine-month period ended March 31, 2003, the reduction in the Group
segment loss was primarily due to significant inventory write-downs recorded in
fiscal 2002 that were not present in fiscal 2003, coupled with lower sales and
gross profit offset partially by reduced R&D expenses in fiscal 2003 compared
with fiscal 2002. The inventory write-downs of $7.6 million recorded in fiscal
2002 were associated with programs that were not anticipated to come back to
their previous forecasts and with our decision to exit our legacy PCI chassis
product line. For these reasons, for the nine-month period ended March 31,
2003, segment loss as a percent of sales to external customers changed from
(31.8)% for the nine-month period ended March 31, 2002 to (15.9)%.

Commercial and Government Group

|                  |  |                   |  |                |  |  |  | 
|----------------- |  | ----------------- |  | -------------- |  |  |  | 
|Nine months ended |  | Sales to External |  | Segment       
|March 31,         |  | Customers         |  | Profit        
|                  |  |                   |  |               
|FY03              |  | $67.1 million     |  | $14.6 million 
|FY02              |  | $61.1 million     |  | $  8.9 million

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SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Continued
March 31, 2003

For the nine-month period ended March 31, 2003, Commercial and Government Group
sales to external customers increased 9.9%, or approximately $6.1 million
compared to the same period of fiscal 2002. Unit shipments in fiscal 2003
increased for the Groups computer processor products, remained consistent with
the prior year for general purpose input/output and computer connectivity and
expansion products, and decreased slightly from fiscal 2002 levels for avionics
and telemetry products. We believe the uncertainty caused by the military
activity in the Middle East during the quarter ended March 31, 2003 adversely
affected the placement of some customer orders. We expect sales in the quarter
ending June 30, 2003 to be similar to or slightly less than sales for the
quarter ended March 31, 2003; however, actual results may vary.

For the nine-month period ended March 31, 2003, the increase in segment profit
was due to the increase in sales combined with a change in sales mix to
products with higher gross margins and decreased SG&A expenses as a result of
the cost reduction efforts implemented during the past several quarters. In
addition, there were significant inventory write-downs recorded in fiscal 2002
that were not present in fiscal 2003. In fiscal 2002, a $4.8 million inventory
write-down and $185,000 of expenditures associated with our manufacturing
consolidation and cost reduction efforts were recorded. The inventory
write-down in fiscal 2002 consisted of inventory associated with products that
will no longer be marketed and excess component parts based on the
implementation of the new inventory management methodology associated with the
consolidation of our manufacturing operations. This was partially offset by
increased R&D expense in fiscal 2003 compared with fiscal 2002 as a result of
the Essential Communications asset acquisition in March 2002. For the same
reasons, for the nine-month period ended March 31, 2003, segment profit as a
percent of sales to external customers increased from 14.6% for the nine-month
period ended March 31, 2002 to 21.8%.

Three Months Ended March 31, 2003 Compared To Three Months Ended March 31, 2002

Sales.For the three-month period ended March 31, 2003, sales decreased 2.7%,
or $788,000, from sales of $29.7 million for fiscal 2002, to $28.9 million.
Sales for the Communications and Enterprise Group were down 34%, or $3.3
million, from sales of $9.9 million in fiscal 2002, to $6.6 million due to the
economic and market conditions negatively impacting the Groups
telecommunications infrastructure customers. Sales for the Commercial and
Government Group increased 13%, or $2.5 million, to $22.3 million for the
nine-month period ended March 31, 2003, from sales for the comparable period in
fiscal 2002 of $19.8 million. We believe the uncertainty caused by the
military activity in the Middle East during the quarter ended
March 31, 2003 adversely affected the placement of some customer orders. We
expect consolidated sales for the quarter ending June 30, 2003 to be similar to
or slightly less than sales for the quarter ended
March 31, 2003; however, actual results may vary.

Gross Profit.For the three-month period ended March 31, 2003, gross profit
decreased $1.1 million, from $15.2 million for fiscal 2002, to $14.1 million.
The decrease in gross profit was primarily due to lower sales and a change in
the sales mix to lower gross margin products. For these reasons, gross
profit as a percentage of sales decreased to 48.9% in fiscal 2003 from 51.3% in
the three-month period ended March 31, 2002. During the three-month period
ended March 31, 2003, we consumed approximately $192,000 of inventory that had
been written down to zero cost during fiscal 2002, increasing gross margin as a
percentage of sales by 0.7%. Based on managements sales projections for the
fourth quarter of fiscal 2003, gross profit as a percentage of sales is
expected to be similar to the percentage experienced in the three-months ended
March 31, 2003; however, actual results may vary.

Selling, General and Administrative Expense.For the three-month period ended
March 31, 2003, selling, general and administrative (SG&A) expense decreased
15.6%, or $1.6 million from $10.0 million for the

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##### Table of Contents



SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Continued
March 31, 2003

three-month period ended March 31, 2002, to $8.4 million. This decrease was
primarily due to the cost reductions implemented throughout the quarters ended
June 30, 2002 and September 30, 2002. For this reason, for the three-month
period ended March 31, 2003, SG&A expense as a percentage of sales decreased
from 33.6% for the quarter ended March 31, 2002, to 29.1%.

Research and Development Expense.For the three-month period ended March 31,
2003, research and development (R&D) expense decreased 10.0%, or $461,000, from
$4.6 million for the three-month period ended March 31, 2002, to $4.2 million.
The decrease was due primarily to the timing of scheduled expenditures for some
of our on-going development programs, partially offset by the addition of
research and development employees as a result of the acquisition of the assets
of Essential Communications completed on March 4, 2002. For the three-month
period ended March 31, 2003, R&D expense as a percentage of sales decreased to
14.4% from 15.6% in fiscal 2002.

Amortization of Intangible Assets.For the three-month period ended March 31,
2003, amortization of intangible assets was $452,000, compared to $1.8 million
for the three-month period ended March 31, 2002. Effective July 1, 2002, we
adopted SFAS 142 and no longer amortize goodwill. There was no goodwill
amortization expense for the three-month period ended March 31, 2003, whereas
goodwill amortization amounted to approximately $1.1 million for the
three-month period ended March 31, 2002.

Interest and Other Income (Expense), Net.For the three-month period ended
March 31, 2003, net interest and other income, principally interest income
associated with surplus cash, was $116,000, which represents a decrease of
19.4% from the $144,000 in the same period of fiscal 2002 due primarily to
lower interest rates.

Income Tax Expense (Benefit).For the three-month periods ended March 31, 2003
and 2002, income tax expense (benefit) represented effective rates of 32.3% and
(69.6)%, respectively. The difference in the effective income tax rate was due
to the impact of a shift in the mix of pre-tax income from domestic and foreign
sources coupled with benefits realized from tax planning strategies in excess
of previous estimates. A tax benefit related to the net loss in fiscal 2002
was recorded primarily due to our ability to realize the benefit through a tax
loss carry back to prior periods.

Earnings Per Share.For the three-month period ended March 31, 2003, net
income per common share and net income per common share  assuming dilution was
$0.06 compared to net loss per share and net loss per common share  assuming
dilution of $(0.03) for the three-month period ended March 31, 2002.

Review of Business Segments

We operate internationally through two operating segments: the Communications
and Enterprise Group and the Commercial and Government Group. These segments
are based on the markets that are served and the products that are provided to
those markets. Each segment has its own sales and distribution channels and a
manager who reports directly to the President and Chief Operating Officer.

The following is a discussion of sales to external customers and segment profit
(loss) for each reportable segment. In the measure of segment profit (loss)
(Segment Profit (Loss)), we do not allocate the following to these segments:



| |  |  | a majority of the amortization expense associated with acquisitions,
| | - |  | --------------------------------------------------------------------
| |  |  | substantially all interest income earned on cash balances, and      
| |  |  | corporate overhead costs, excluding corporate marketing costs.      

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##### Table of Contents



SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Continued
March 31, 2003

Communications and Enterprise Group

|                   |  |                   |  |                |          |   |  | 
|------------------ |  | ----------------- |  | -------------- | -------- | - |  | 
|Three months ended |  | Sales to External |  | Segment Profit
|March 31,          |  | Customers         |  | (Loss)        
|                   |  |                   |  |               
|FY03               |  | $6.6 million      |  | $              | (276,000 | )
|FY02               |  | $9.9 million      |  | $              | (668,000 | )

For the three-month period ended March 31, 2003, Communications and Enterprise
Group sales to external customers decreased 33.6%, or $3.3 million compared
with the same quarter of fiscal 2002. This decrease was due principally to the
economic and market conditions negatively affecting the Group and our
customers. We continue to experience the effects of reduced booking
activities, delays of existing backlog orders, and prior order cancellations by
our telecommunications infrastructure customers. We expect sales in the
quarter ending June 30, 2003 to be similar to or slightly less than sales for
the quarter ended March 31, 2003; however, actual results may vary.

For the three-month period ended March 31, 2003, the reduction in the segment
loss was primarily due to lower SG&A and R&D expenses in fiscal 2003 resulting
from the cost reduction initiatives implemented during the past several
quarters. This was partially offset by the decrease in sales and a change in
product mix to lower margin products in fiscal 2003. For the same reasons, for
the three-month period ended March 31, 2003, segment loss as a percentage of
sales to external customers went from (6.8)% for the three-month period ended
March 31, 2002 to (4.2)%.

Commercial and Government Group

|                   |  |                   |  |              |  |  |  | 
|------------------ |  | ----------------- |  | ------------ |  |  |  | 
|Three months ended |  | Sales to External |  | Segment     
|March 31,          |  | Customers         |  | Profit      
|                   |  |                   |  |             
|FY03               |  | $22.3 million     |  | $4.7 million
|FY02               |  | $19.8 million     |  | $4.4 million

For the three-month period ended March 31, 2003, Commercial and Government
Group sales to external customers increased 12.8%, or $2.5 million compared
with the same quarter of the fiscal 2002. Sales increased for the Groups
computer processor products in fiscal 2003 compared to the prior year, while
sales of avionics, telemetry, general purpose input/output and connectivity and
expansion products declined from fiscal 2002 levels. We believe the
uncertainty caused by the military activity in the Middle East during the
quarter ended March 31, 2003 adversely affected the placement of some customer
orders. We expect sales in the quarter ending June 30, 2003 to be similar to
or slightly less than sales for the quarter ended March 31, 2003; however,
actual results may vary.

For the three-month period ended March 31, 2003, the slight increase in segment
profit in fiscal 2003 was due to the increase in sales offset by a change in
sales mix to lower margin products during the quarter ended March 31, 2003 as
compared to fiscal 2002. In addition, SG&A expenses were reduced in fiscal
2003 compared to the prior year due to the cost reduction initiatives
implemented during the past several quarters. For these reasons, segment
profit as a percentage of sales was consistent for the three-month period ended
March 31, 2003 at 21.1% as compared to 22.0% for the same period of fiscal
2002.

Liquidity and Financial Condition

We use a combination of the sale of equity securities, internally generated
funds and bank borrowings to finance our acquisitions, working capital
requirements, capital expenditures and operations.

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##### Table of Contents



SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Continued
March 31, 2003

Cash totaled $28.9 million at March 31, 2003, an increase of $4.1 million from
June 30, 2002. Net cash provided by operating activities was $5.3 million and
proceeds from the exercise of stock options totaled $13,000. These cash
inflows were offset by $200,000 used for the purchase of a license agreement,
$985,000 used for the purchase of capital equipment, and $321,000 used to
repurchase 46,000 shares of SBS common stock pursuant to a repurchase plan
initially adopted for a one year period by the Board of Directors on September
14, 2001 and extended until September 13, 2003. That plan allows for the
repurchase of up to 1,000,000 shares of SBS Common Stock at an aggregate cost
not to exceed $8,000,000. During the nine month period ended March 31, 2003,
the decrease in accounts receivable provided cash for operations of $476,000
due to improved cash collection efforts, and the decrease in inventory provided
cash for operations of $996,000, prior to foreign currency translation
adjustments of $375,000, due to continued efforts to reduce inventory
quantities. Liabilities decreased by approximately $1.8 million, consistent
with the current level of business.

At June 30, 2002, the Company was out of compliance with the cash flow coverage
ratio covenant of our amended $30.0 million Credit Agreement (Agreement) with
Bank of America, N.A., primarily due to the inventory write-down and charges
for impairment of identifiable intangibles and goodwill recorded in the fourth
quarter of fiscal 2002. At no time during fiscal 2003 were any borrowings drawn
on the Agreement. On September 20, 2002, we canceled the Agreement.
Management does not believe, as of the date of this report and based upon
managements assessment of future cash needs and sources of cash, that our
liquidity needs require us to maintain a credit facility at this time.

Management believes that our internally generated funds will be sufficient to
finance our current operations and capital expenditures, excluding
acquisitions, for at least the next twelve months. Because long-term cash flow
cannot be predicted with certainty, it is possible in the future that we could
require external financing through bank facilities, the sale of equity or debt
securities, or other sources of capital. The sale of any equity or debt
securities, if required, may result in additional dilution to the shareholders.
We cannot be certain that additional financing will be available, in amounts,
or on terms, acceptable to the Company.

As of the date of this report, we do not have any material capital expenditure
commitments. As of
March 31, 2003, we are committed under noncancelable operating leases that
expire at various dates through fiscal 2006, as described in Managements
Discussion and Analysis in our Annual Report on Form 10-K for the fiscal year
ended June 30, 2002.

For the nine-month period ended March 31, 2003, there was no significant impact
from inflation.

Business Outlook

Consistent with our press release dated April 24, 2003, the continuing economic
conditions and uncertainties in the markets we serve make short and long-term
visibility difficult. As a result, we expect sales for the quarter ending June
30, 2003, to be similar to or slightly less than sales for the third quarter
ended
March 31, 2003. Further, we anticipate completing step 2 of the transitional
impairment analysis required by SFAS 142 and we will record any impairment
charge in the financial statements for the fiscal year ending June 30, 2003.

Management expects that corporate representatives of SBS will meet privately
during the quarter with investors, investment analysts, the media and others,
and may reiterate the Business Outlook published in this Form 10-Q. At the
same time, this Form 10-Q and the included Business Outlook will remain
publicly available on our Web site (www.sbs.com). Unless a notice stating
otherwise is published, the public can continue to rely on the Business Outlook
published on the Web site as representing our current
expectations

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##### Table of Contents



SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Continued
March 31, 2003

on matters covered.




Item 3  Quantitative and Qualitative Disclosures about Market Risk

The Companys liquid investment is cash invested in either money market
accounts or in overnight repurchase agreements. Due to the nature of these
investments, we believe that the market risk related to these investments is
minimal.

As a result of the Companys German operating and financing activities, we are
exposed to market risk from changes in foreign currency exchange rates. As of
March 31, 2003, we have not entered into any foreign exchange forward contracts
to reduce exposure to changes in foreign currency exchange rates.




Item 4  Controls and Procedures

(a)   Evaluation of disclosure controls and procedures.Based on their
evaluation, with the participation of management, as of a date within 90 days
of the filing date of this Quarterly Report on Form 10-Q, our principal
executive officer and principal financial officer have concluded that our
disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under
the Securities Exchange Act of 1934 (the Exchange Act)) are effective to
ensure that information required to be disclosed by us in reports that we file
or submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange
Commission rules and forms.

(b)   Changes in internal controls. There were no significant changes in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

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##### Table of Contents






PART II - OTHER INFORMATION




Item 1  Legal Proceedings



| |  | During the nine-month period ended March 31, 2003, the Company received
notice of a claim for patent infringement regarding the sale of our PCMCIA
product line. As of December 31, 2002, management was evaluating the
claim and attempting to reach a settlement. As a result, an estimate for
the possible loss was recorded in the quarter ended December 31, 2002
based on our belief that a settlement was probable. On February 4, 2003,
we entered into an agreement to settle the claim for an amount consistent
with our estimate.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




Item 6  Exhibits and Reports on Form 8-K.



| | (a) |  | Exhibits (exhibit reference numbers refer to Item 601 of Regulation
S-K)
| | --- |  | ------------------------------------------------------------------------

|      |  |  |    |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|----- |  |  | -- | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|03.i  |  |  | (1 | ) |  | Restated Articles of Incorporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|      |  |  |    |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|03.ii |  |  | (1 | ) |  | Restated and Amended Bylaws.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|      |  |  |    |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|04.a  |  |  | (1 | ) |  | Article VI of the Restated Articles of
Incorporation, as included in the Restated Articles of
Incorporation of SBS Technologies, Inc.                                                                                                                                                                                                                                                                                                                                                                                         
|      |  |  |    |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|04.b  |  |  | (1 | ) |  | Articles I and II of the Restated and Amended
Bylaws of SBS Technologies, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|      |  |  |    |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|04.c  |  |  | (1 | ) |  | Form of certificate evidencing Common Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|      |  |  |    |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|04.1  |  |  | (1 | ) |  | Rights Agreement dated September 15, 1997
between SBS Technologies, Inc. and First Security Bank (now
Wells Fargo), National Association, as Rights Agent, which
includes the form of Right Certificate as Exhibit A and the
Summary of Rights to Purchase Common Stock as Exhibit B.2 and
Agreement to Serve as Rights Agent; on January 21, 1998,
pursuant to Section 21 of the Shareholder Rights Agreement
dated September 15, 1997, we appointed Norwest Bank Minnesota
N.A. (now Wells Fargo) as Successor Rights Agent.
|      |  |  |    |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.bx |  |  | (1 | ) |  | Employment agreement between Bruce E. Castle
and SBS Technologies, Inc., effective July 31, 2002, dated June
27, 2002                                                                                                                                                                                                                                                                                                                                                                                                         
|      |  |  |    |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|99.1  |  |  | (1 | ) |  | Certification of Clarence W. Peckham, Chief
Executive Officer, Pursuant to 18 U.S.C. Section 1350 As
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.                                                                                                                                                                                                                                                                                                                                                       
|      |  |  |    |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|99.2  |  |  | (1 | ) |  | Certification of James E. Dixon, Jr., Chief
Financial Officer, Pursuant to 18 U.S.C. Section 1350 As
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
(1)   See Exhibit Index                                                                                                                                                                                                                                                                                                                               



| | (b) |  | Reports on Form 8-K                                                                                                                                                                   
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Current report dated January 9, 2003, announcing that Mr. Richard
Szafranski was appointed as a member of the Board of Directors of
SBS Technologies, Inc. effective January 10, 2003.

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##### Table of Contents






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

| |  |                                     |  |                                                                       
| |  | ----------------------------------- |  | ----------------------------------------------------------------------
| |  | SBS TECHNOLOGIES, INC.
(Registrant)
| |  |                                     |  |                                                                       
| |  | By:                                 |  | /s/ Clarence W. Peckham                                               
| |  |                                     |  |                                                                       
| |  |                                     |  | Clarence W. PeckhamChief Executive Officer                            
| |  |                                     |  |                                                                       
| |  | By:                                 |  | /s/ James E. Dixon Jr.                                                
| |  |                                     |  |                                                                       
| |  |                                     |  | James E. Dixon Jr.Executive Vice President and
Chief Financial Officer

Date: May 14, 2003

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##### Table of Contents






CERTIFICATION

I, Clarence W. Peckham, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of SBS Technologies,
Inc.;                                                                                                                                                                                                                                                 
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in the Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:                                                                                                 



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weaknesses
in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Dated: May 14, 2003



| | /s/ Clarence W. Peckham
Clarence W. PeckhamChief Executive Officer
| | ------------------------------------------------------------------

Page 27



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##### Table of Contents



CERTIFICATION

I, James E. Dixon, Jr., certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of SBS Technologies,
Inc.;                                                                                                                                                                                                                                                 
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in the Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:                                                                                                 



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weaknesses
in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Dated: May 14, 2003



| | /s/ James E. Dixon, Jr.
James E. Dixon, Jr.Executive Vice President and
Chief Financial Officer
| | -----------------------------------------------------------------------------------------------

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##### Table of Contents






SBS TECHNOLOGIES, INC. AND SUBSIDIARIES
EXHIBIT INDEX

|               |     |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                  |                              
|-------------- | --- | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------- | -----------------------------
|Exhibit Number |     | Description |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Method of Filing
|               |     |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                 
|03.i           | (1) |             | Restated Articles of Incorporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                  |                             
|               |     |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                  |                              
|03.ii          | (2) |             | Restated and Amended Bylaws                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                  |                            
|               |     |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                  |                              
|04.a           | (1) |             | Article VI of the Restated Articles of
Incorporation, as included in the Restated
Articles of Incorporation of SBS
Technologies, Inc.                                                                                                                                                                                                                                                                                                                                                                                          |                  |                            
|               |     |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                  |                              
|04.b           | (2) |             | Articles I and II of the Restated and
Amended Bylaws of SBS Technologies, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                  |                            
|               |     |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                  |                              
|04.c           | (3) |             | Form of certificate evidencing Common stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                  |                            
|               |     |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                  |                              
|04.1           | (4) |             | Rights Agreement dated September 15, 1997
between SBS Technologies, Inc. and First
Security Bank (now Wells Fargo), National
Association, as Rights Agent, which
includes the form of Right Certificate as
Exhibit A and the Summary of Rights to
Purchase Common Stock as Exhibit B.2, and
Agreement to Serve as Rights Agent; on
January 21, 1998, pursuant to Section 21
of the Shareholder Rights Agreement dated
September 15, 1997, we appointed Norwest
Bank Minnesota N.A. (now Wells Fargo) as
Successor Rights Agent |                  |                            
|               |     |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                  |                              
|10.bx          |     |             | Employment agreement between Bruce E.
Castle and SBS Technologies, Inc.,
effective July 31, 2002                                                                                                                                                                                                                                                                                                                                                                                                                               |                  | Filed herewith
electronically
|               |     |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                  |                              
|99.1           |     |             | Certification of Clarence W. Peckham,
Chief Executive Officer, Pursuant to 18
U.S.C. Section 1350 As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002.                                                                                                                                                                                                                                                                                                                                                        |                  | Filed herewith
electronically
|               |     |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                  |                              
|99.2           |     |             | Certification of James E. Dixon, Jr.,
Chief Financial Officer, Pursuant to 18
U.S.C. Section 1350 As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002.                                                                                                                                                                                                                                                                                                                                                        |                  | Filed herewith
electronically



---

|(1) |  | Incorporated by reference to Exhibit 3.i, of the Registrants Quarterly Report on Form 10-Q for the quarter
ended September 30, 2000. 
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Incorporated by reference to Exhibit 3.ii, of the Registrants Quarterly Report on Form 10-Q for the quarter ended September 30, 2000.
|   
|(3) |  | Incorporated by reference to Exhibit 4.c, of the Registrants Quarterly Report on Form 10-Q
for the quarter ended March 31, 2001.     
|   
|(4) |  | Incorporated by reference to Exhibit 4.1 of the Registrants Annual
Report on Form 10-K for the year ended June 30, 2002.             

Page 29